Gap between rich and poor parts of Australia some of largest in world

Australia has one of the biggest gaps between its richest cities and poorest regions in the developed world with warnings it could worsen without direct assistance from state and federal governments.

Special research by the International Monetary Fund released on Thursday found that, of the world's 22 most developed nations, Australia was ranked fourth in terms of the gap between well-off regions and those that are struggling. The top three countries are the Slovak Republic, the Czech Republic and Canada.

Australia has one of the biggest gaps between its rich cities and poor regions in the developed world. Poorer regions are most likely to depend on agriculture and manufacturing.Credit:Lee Atkinson

It said there were also growing risks that poorer regions, most likely to depend on agriculture or manufacturing, would be made even worse off as climate change intensified.

IMF researchers found that economic performance between regions in certain countries could be larger than those between nations, exerting enormous internal political tensions.

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They compared the real GDP per capita in the richest 10 per cent of regions with those of the bottom 10 per cent.

In countries with few regional gaps, such as Japan and France, the richest areas were about 35 per cent better off than the poorest.

But in those with large gaps, such as Australia, the richest areas - including parts of Sydney and Melbourne - were at least twice as well off than poor areas such as regional Queensland, Western Australia and the Northern Territory.

The researchers found the gap between the rich and poor was growing between regions, with both financial as well as social repercussions.

"Rising disparities means that poorer regions in advanced economies are no longer catching up to the rich as fast as they used to," they said.

"On average, people in lagging regions are worse off when it comes to health, with higher infant mortality and lower life expectancy."

Previous Australian studies have identified the large economic gap between certain regions. SGS Economics and Planning last year found almost two-thirds of GDP growth over the previous 12 months had come from Sydney, Melbourne and Brisbane.

The IMF said lagging regions across the world were more likely to have unfavourable demographics compared with richer ones, fewer university-educated residents and higher unemployment rates.

They were also more likely to depend either on agriculture or manufacturing. Richer regions had a higher proportion of people working in the services sector.

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The researchers said the economic base of lagging regions put them at risk of climate change.

The Morrison government is hoping to encourage new migrants to settle in regional parts of Australia to take pressure off the major cities and also to strengthen the economic base of regions.

The nation's treasurers will discuss the government's population policy at a meeting in Canberra on Friday.

The IMF said governments could consider specific financial support to lagging communities including programs to enable worker relocation. However, it warned that these had to be designed carefully, otherwise they might hinder a region's adjustment.

More education and workplace training for struggling regions would also give them some hope of making up the gap with those parts of a country doing well.